Federal Reserve Act of 1913
Congressional legislation passed December 23, 1913, establishing the Federal Reserve System as the United States' central banking authority, often cited in conspiracy theories about private banking control of monetary policy.
The Federal Reserve Act was signed into law by President Woodrow Wilson on December 23, 1913, creating the Federal Reserve System as the nation's central bank. The act was drafted by Senator Robert Owen and Representative Carter Glass following the Panic of 1907, which highlighted weaknesses in the American banking system.
The legislation established twelve regional Federal Reserve Banks overseen by a Board of Governors appointed by the President and confirmed by the Senate. The system was designed to provide elastic currency, supervise banks, and serve as a lender of last resort during financial crises. The Federal Reserve gained authority to issue currency and regulate the money supply.
Secret negotiations leading to the act's creation occurred at Jekyll Island, Georgia, in November 1910, where representatives of major banks including J.P. Morgan, Rockefeller interests, and European banking houses met to draft preliminary plans. This secretive meeting has fueled conspiracy theories about private banking interests capturing control of American monetary policy.
Critics argue the Federal Reserve represents unconstitutional delegation of monetary authority to private banks, pointing to the regional banks' partial private ownership and the selection of their boards by member banks. Supporters contend the system provides necessary stability and independence from political pressure in monetary policy decisions.
Bibliography:
- Lowenstein, Roger. *America's Bank: The Epic Struggle to Create the Federal Reserve*. 2015.
- Meltzer, Allan H. *A History of the Federal Reserve*. 2003.
- Griffin, G. Edward. *The Creature from Jekyll Island*. 1994.
- Warburg, Paul M. *The Federal Reserve System*. 1930.
— EC